EU CSRD: key changes proposed by EFRAG to the ESRS

On 31 July 2025, EFRAG published the revised Exposure Drafts of the European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive (CSRD) for a public consultation which closes on 29 September 2025. 

In our previous blog post we described the background, timing and main elements of the Exposure Drafts and the consultation process. In this blog post, we provide more detail on the key changes proposed, focussing on ESRS 1 (General requirements) and ESRS 2 (General disclosures). 

Summary

On publication of the Exposure Drafts, EFRAG announced a 57% reduction in mandatory datapoints which, on the face of it, certainly seems extensive. However, whilst helpful, these amendments are primarily focused on textual and structural simplification and clarification, rather than substantive changes to the information that is required to be disclosed. 

That said, there are some proposed revisions that may help to streamline disclosures and the disclosure process:

• Double materiality assessment (DMA) – whilst the fundamentals of the DMA have not changed (in particular, entities are still required to undertake an impact and financial materiality assessment), EFRAG have made clear that undertakings are expected to take a pragmatic and streamlined approach and a number of revisions have been made to emphasise this.
• Undue costs and efforts – a new relief has been introduced providing for the use of reasonable and supportable information that is available without undue cost or effort. This relief is applicable to the identification of material impacts, risks and opportunities; determination of the scope of an entity’s value chain; and preparing information on metrics other than GHG emissions.
• Fair presentation – more emphasis has been placed on the concept of fair presentation (relevance and faithfulness) of disclosures, including extending the concept of materiality to all information disclosed as a general filter.

Simplified DMA

• Streamlining approach. EFRAG has made several amendments intended to clarify that entities can, and are expected to, take a pragmatic approach to their DMA, focusing on what is known or likely to be material to the entity. This is designed to reduce the resource burden of the DMA (both time and expense), whilst also responding to some of the criticisms of the DMA assurance process. These changes (if adopted) should allow more discretion in how a DMA is undertaken based on existing knowledge of the business and what is material. It should assist discussions with assurers on the DMA process, in particular focusing discussion on topics that are most likely to be material to an entity. 
• Taking a pragmatic starting point. Entities should focus on where material impacts, risks and opportunities are likely to arise, rather than considering all possible impacts, risks and opportunities. Where conclusions on materiality can be readily derived from the entity’s business model, value chain, peer analysis, or strategic and business priorities, the revised ESRS provides that further detailed assessment may not be required for these topics.
• List of topics. Relatedly, the list of topics in ESRS 1, AR 16 has been structurally simplified (although most of the topics themselves remain). EFRAG clarified that entities do not need to work through each topic as if it were a mandatory checklist. Rather, this now forms an illustrative guide of topics that may be material. 
• IROs. Entities are expected to use “reasonable and supportable” information to estimate levels of severity/likelihood/magnitude. The revised ESRS clarify that quantitative information or scoring is not always necessary and qualitative information may suffice. In addition, entities are not always required to assess (and score) all aspects of severity for impacts, nor is it necessary to analyse every time horizon for all IROs (unless this is necessary to determine materiality of an IRO). 
• Positive impacts/opportunities. EFRAG expressly rejected making positive impact/opportunity disclosures optional and therefore consideration of positive impacts and opportunities continue to be part of DMA and disclosures.

Streamlining material disclosures

• Presentation. EFRAG have emphasised the importance of avoiding fragmentation and repetition of information. Disclosures may now include an executive statement and be accompanied by appendices containing more detailed information and additional non-material information not required by the ESRS (although this must be clearly identified). 
• Materiality of information. EFRAG has made clear that entities should apply a materiality filter to all information disclosed (not just to metrics). ’Shall’ disclosure requirements are only required if the information/data point is material. This is to help streamline reporting and ensure unnecessary information is not included. 
• Voluntary disclosures and illustrative guidance. Voluntary disclosures have been eliminated. In addition, the overall structure of the ESRS has been amended, and mandatory and non-mandatory content has been separated. 
• Non-Mandatory Illustrative Guidance. Separate “Non-Mandatory Illustrative Guidance” has been proposed, gathering selected non-mandatory content deleted from the original ESRS and content from some EFRAG Q&As. The legal status of this guidance will be confirmed by the Commission, which will decide whether to include it in the ESRS Delegated Act or have EFRAG publish it as guidance (the latter being EFRAG SRB’s preference).
• Elimination of overlaps between general disclosures and topical standards. The ESRS 2 cross-cutting minimum disclosure requirements (MDR) have been renamed “General Disclosure Requirements” (GDR) and significantly revised. The number of datapoints regarding mandatory policies, actions and targets (PATs) in ESRS 2 and in topical standards has been reduced.

Enhanced interoperability with global reporting standards

ERAG has introduced some changes intended to promote compatibility with standards set by the International Sustainability Standards Board (ISSB), including:

• Fair presentation. EFRAG emphasised that the ESRS is a ‘fair presentation’ framework, with materiality of information as a general filter for reported information, similar to ISSB. The concept of ‘fair presentation’ is used in the ISSB standards to mean a complete set of sustainability-related financial disclosures that present fairly all sustainability-related risks and opportunities that could reasonably be expected to affect an entity’s prospects.
• GHG emissions reporting boundary. The GHG emissions reporting boundary in ESRS E1 (Climate Change) has been aligned more closely with the GHG Protocol, allowing only the financial consolidation approach. A separate disclosure based on operational control is required where the financial control metric does not fully present IROs from operated assets outside the reporting entity’s scope. 
• Common wording with IFRS. Aligning the language of certain provisions which were similar. This includes ESRS E1 provisions on transition plans, scenario analysis, resilience, internal carbon pricing, scope 3 measurement and anticipated financial effects (opportunities). It also includes some broader concepts in ESRS 1, such as disclosing information to enable users to understand judgements made or ensuring that the level of aggregation/disaggregation does not obscure information that is material. 

However, in its Basis for Conclusions, EFRAG makes clear there will continue to be areas of misalignment. For example, EFRAG rejected incorporating the ISSB relief allowing for the omission of Scope 3 GHG emissions where impracticable. In addition, even where new provisions have been introduced which appear to align with ISSB there have been some divergences. For example, EFRAG’s introduction of the “undue costs and efforts” relief has been given an expanded scope in the ESRS, which has attracted some early criticism.

Other new reliefs

• Metrics. Introduction of a new relief allowing the exclusion of activities from metric calculations if they are not expected to be a significant driver of the IRO and, in relation to environmental metrics other than for climate change, the exclusion of non-operated joint ventures.
• Lack of data quality on metrics. Another relief is introduced, allowing an undertaking to report metrics based on a partial scope of calculation when reliable direct or estimated data are not available. This relief does not exempt the undertaking from providing a disclosure; rather, it permits disclosure of a calculation based on limited data. When applying this relief, the undertaking must disclose the actions taken to improve the coverage of its calculation in future periods. This relief applies to both the undertaking’s own operations and its value chain.
• Acquisitions/disposals. Entities may defer reporting for acquired assets until the following reporting period and de-scope assets mid-year for the entire reporting period, except for ‘significant events’.

CSRD-level topics

Various points to be resolved have not been addressed by EFRAG because they must be dealt with at CSRD-level (as primary legislation). This includes potential relief for confidential/sensitive information disclosures, phase-ins, the definition of value chain for financial institutions, potential relief from consolidating subsidiaries for financial holding companies, and the clarification of “compatibility with 1.5 degrees’ for the ESRS E1 transition plan disclosures. 

Consultation questions: where EFRAG SRB members could not agree

EFRAG is consulting with the public on several specific issues where EFRAG SRB members expressed reservations or concerns. These include (but are not limited to) the following:

• “Gross vs net” issue. The revised ESRS now includes provisions on the gross/net concept to be applied during the DMA process (i.e. determination of whether potential impacts are material should be considered without considering mitigants), rather than leaving this concept to be dealt with in guidance. However, as the concept is proving difficult to describe and apply in practice, EFRAG is looking to clarify this as part of the consultation. 
• Time limit for the relief for lack of data quality on metrics. As mentioned above, ESRS now allowing an undertaking to report metrics with a partial scope of calculation in case of lack of quality data. There is no time limit for this new relief, although some EFRAG SRB members believe a time limit is essential.  EFRAG is therefore specifically asking whether this newly introduced relief should be subject to a time limit.
• Relief for anticipated financial effects. Disclosing financial effects is potentially challenging due to a lack of mature methodologies and commercial sensitivity. The revised ESRS propose two options as part of the consultation: (i) require both qualitative and quantitative information but allow omission of quantitative information in certain cases; or (ii) limit requirements to qualitative information, leaving quantitative reporting voluntary.
• Fair presentation framework. As mentioned above, the amendments affirm the ESRS as a ‘fair presentation’ framework, like the ISSB’s standards. However, as some EFRAG SRB members argue that the CSRD does not mandate fair presentation and that this is not a simplification as it introduces subjective judgement, especially where practices are less established, this has been opened to consultation.
• Exception for financial institutions’ absolute climate reduction targets. Some financial institutions have raised challenges regarding the requirement to disclose both intensity and absolute greenhouse gas emission targets and have sought an exception. Supporters of the exception argue the information is not useful for this sector; opponents note that both types of information are needed and that an exception could disadvantage other sectors. This has therefore been included as an open query in the consultation. 
• Calculation of adequate wages outside the EU. The revised ESRS S1 introduces a revised methodology for calculating non-EU adequate wages. Some EFRAG SRB members have raised concerns due to the complexity, and a targeted field test is underway.